Google has recently changed it's trademark policy to allow people to bid on trademark phrases of companies within the US and Canada. Inside the US and Canada they will not allow trademark terms to appear in the ad copy. Outside those areas the will check ad text and keyword.

There has not yet been any clear statement in what the valid trademark laws are on the internet. With the advent of <iframe>'s and paid ads triggered by keywords the waters are sure to be muddy for an exceptionally long time...perhaps indefinitely.

Trademark owners should still be able to protect their trademarks via the autmated price system of Google. Trademark terms showing up in ads will warrent greater clickthrough rates since their terms will appear bolded. This will cause the prices to be reduced as these clickthrough rates are factored into click price. Your competitors will be required to spend much more to have their ad compete. Google AdWords Trademark Complaint Procedure – Trademark rights in US and Canada

When we receive a complaint from a trademark owner, we will only investigate whether the advertisements at issue are using the trademarked term in ad text . If they are, we will require the advertiser to remove the trademarked term from the text of the ad and prevent the advertiser from using the trademarked term in ad text in the future. Please note that we will not disable keywords associated with trademark usage. In addition, please note that any such investigation will only affect ads served on or by Google.

When we receive a complaint from a trademark owner, our review is limited to ensuring that the advertisements at issue are not using the trademarked term in the ad text or as a keyword trigger. If they are, we will require the advertiser to remove the trademarked term from the ad text or keyword list and will prevent the advertiser from using the trademarked term in the future. Please note that any such investigation will only affect ads served on or by Google.